Health Insurance (other types of insurance & pensions)
Sheikh Sulaymān Ar-Ruhaili waffaqahullah said (paraphrasing):
Every commercial insurance intended for profit is a type of commercial insurance that is PROHIBITED by Islamic law, as it involves uncertainty and unjust consumption of wealth. For example, a company offering health insurance might require an annual payment of 1,000 riyals a year in exchange for medical coverage. If the person does not fall ill during that year, the company unjustly profits from their payment. Alternatively, if they require treatment worth 50,000 riyals, the company loses that amount. This involves significant uncertainty, as the subject of the contract is unknown and unnecessary. Therefore, car insurance, health insurance, and life insurance, all aimed at generating profit for a company, are considered IMPERMISSIBLE by the majority of contemporary scholars, and this is the correct ruling.
ARE THERE ANY EXCEPTIONS?
Yes, the following cases are exceptions:
As for cooperative insurance, which is designed to provide mutual support among people rather than profit, it is permissible. In this type of arrangement, those who contribute do so not for profit, and those who receive help do not seek to profit either. Instead, the goal is to support one another. For example, in a city where individuals cannot afford healthcare on their own, they might establish a cooperative fund where each member contributes 10 riyals monthly, managed by a trusted group. The funds may be invested to grow the capital, and when someone needs treatment, they receive support from this fund. This is cooperative insurance, which is not aimed at profit but at providing assistance. It is permissible, with no objections.
In my view, what is known as state-organised pension funds for government employees, or social security funds organised for companies, fall under the category of cooperation rather than profit-seeking. Their purpose is to provide assistance in cases of disability or retirement. These arrangements are a form of cooperation and are permissible. It is not required that a person receive exactly what they have paid in, as they might receive more or less, depending on the circumstances, since this is a cooperative effort rather than a commercial transaction or business venture.
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